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Sustainable growth rate

Atlantic Transportation Co. has a payout ratio of 60 percent, debt-equity ratio of 50 percent, return on equity of 16 percent, and an assets-sales ratio of 175 percent.

a. What is its sustainable growth rate?
b. What must its profit margin be in order to achieve its sustainable growth rate?

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Solution Summary

Sustainable growth rate and the profit margin required for achieving sustainable growth rate have been calculated.